MARCEL MBAMALUThis looks like a choreography of controversy! Despite being conceived in 2013, when it was billed to cost $9 billion, Dangote Refinery construction did not start until 2017. The initial target for oil refining to begin was 2016, but as of July 2024, the refinery, said to have cost $20 billion, was still awaiting its first production of Premium Motor Spirit, (PMS). More than 10 production deadlines have been missed along the way.
On Sunday, 21 July 2024, Aliko Dangote, President of the Dangote Group, expressed palpable anger at the frustrations faced by his refinery at the hands of international oil marketers. Dangote Refinery has not operated well above half of its 650,000 barrels per day capacity since starting refining of diesel and aviation fuel in January 2024. Thus, from several cases of missed deadlines to begin the refining of PMS, the new twist is threat of disposal of the Dangote Refinery, an apparent climax in a choreography of controversy about a beleaguered refinery.
Join our WhatsApp ChannelAccording to Dangote, “We have been facing fuel crisis since the 70s. This refinery can help in resolving the problem but it does appear some people are uncomfortable that I am in the picture. So, I am ready to let go, let the NNPC buy me out, run the refinery. At least the country will have high-quality products and create jobs.” Dangote apparently regretted not heeding warnings from investor friends to jettison the country and invest overseas.
Supply Controversies: NNPCL in Race against Self?
The NNPCL has a 7.2% stake (as against the initially touted 20%) in Dangote Refinery, yet it refuses to give the oil plant prime consideration in crude supplies. Recall that the NNPCL had explained that it could not supply the refinery with crude because it (NNPCL) had committed its future crude oil to Africa-Export-Import Bank in a $3 billion crude-for-loan deal. The NNPC’s crude swap arrangements for refined products consumed N2.6 trillion in 2021, according to the Nigeria Extractive Industries Transparency Initiative (NEITI). The NNPCL had forecast to meet Dangote Refinery’s need for local crude in November 2023. It did not work.
Was it because of Dangote Refinery that some of Nigeria’s creditors allowed the country to use crude oil swaps to pay its foreign debts? The National Public Relations Officer of the Independent Petroleum Marketers Association of Nigeria, Chief Ukadike Chinedu, had advised that Nigeria “should have a local content quota for domestic refineries”, because “it is very frustrating that Dangote, the largest refinery in Africa, is importing crude from the United States, Brazil, and others when we produce crude in Nigeria.”
In her own reaction, the Director-General of the Lagos State Chamber of Commerce and Industry, Chinyere Almona, noted that crude oil theft and pipeline vandalism were factors hindering the oil majors’ inability to meet their daily quotas. She also noted that modular refineries were experiencing similar difficulties in getting crude. Yet, questions have arisen about those helping oil theft, including taking it abroad.
Curiously, while on a guided tour of the refinery at the Lekki Free Trade Zone in Lagos on Sunday 14 July 2024, the President of the Dangote Refinery, Aliko Dangote, told journalists that the FG and Nigeria National Petroleum Company Limited (NNPCL) had intervened to resolve the crude oil supply saga. Based on this, he gave assurances that the refinery would produce PMS come August 2024.
READ ALSO: Dangote Refinery: Of Hopes, Drools And Jokes
In 2023, Dangote Refinery had cried out over attempts by international oil companies’ (IOCs) refusal to supply it with crude oil. The refinery said that “NNPC owns 20 per cent equity in the Dangote Refinery and has a first right of refusal to supply crude oil to the plant. The Nigerian National Petroleum Company (NNPC) Limited was then expected supply the new refinery with up to six cargoes of crude oil in December for test runs. As of May 2023, reports showed that the NNPC had delivered only 6.9 million barrels of oil to Dangote Refinery, according to S&P Global Platts, which tracks supply data.
In December 2023, it was also said that the refinery took delivery of its first one million barrels of Agbami crude grade from Shell International Trading and Shipping Company Limited (STASCO). It was also reported that over the next one year, the refinery will source one-third of its oil from the US, and this amounts to at least 24 million barrels of crude oil. Reports from Bloomberg show that Dangote Refinery will source two million barrels per month from West Texas Intermediate Midland crude for a year as from July 2024.
Dr Mbamalu is a Jefferson Fellow, member of the Nigerian Guild of Editors (NGE) and a renowned Publisher
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Dr. Marcel Mbamalu is a communication scholar, journalist and entrepreneur. He holds a Ph.D in Mass Communication from the University of Nigeria, Nsukka and is the Chief Executive Officer Newstide Publications, the publishers of Prime Business Africa.
A seasoned journalist, he horned his journalism skills at The Guardian Newspaper, rising to the position of News Editor at the flagship of the Nigerian press. He has garnered multidisciplinary experience in marketing communication, public relations and media research, helping clients to deliver bespoke campaigns within Nigeria and across Africa.
He has built an expansive network in the media and has served as a media trainer for World Health Organisation (WHO) at various times in Northeast Nigeria. He has attended numerous media trainings, including the Bloomberg Financial Journalism Training and Reuters/AfDB training on Effective Coverage of Infrastructural Development of Africa.
A versatile media expert, he won the Jefferson Fellowship in 2023 as the sole Africa representative on the program. Dr Mbamalu was part of a global media team that covered the 2020 United State’s Presidential election. As Africa's sole representative in the 2023 Jefferson Fellowships, Dr Mbamalu was selected to tour the United States and Asia (Japan and Hong Kong) as part of a 12-man global team of journalists on a travel grant to report on inclusion, income gaps and migration issues between the US and Asia.
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